Strategies for Competing In International Markets

CHAPTER 7

WHY COMPANY DECIDE TO ENTER FOREIGN MARKETS

1.  To gain access to new customers
2. To spread business risk across a wider market base
3. To gain access to resources and capabilities located in foreign markets
4. To further exploit core competencies
5. To achieve lower costs through economies of scale, experience, and increased purchasing power
   
   
   Why Competing Across National Borders Makes Strategy-Making more complex?
   i-                    Different countries have different home-country advantages in different industries
   ii-                   Location-based value chain advantages for certain countries
   iii-                 Differences in government policies, tax rates, and economic conditions
   iv-                 Currency exchange rate risks
   v-                  Differences in buyer tastes and preferences for products and services
   
   
   The Diamond of National Advantage
    
    
   EFFECT OF EXCHANGE RATE SHIFTS:
   - exporters experience a rising demand for their goods whenever their currency grows weaker relative to the importing country's currency.
   exporters experience a falling demand for their goods whenever their currency grows stronger relative to the importing country's currency.
   COLLABORATIVE STRATEGIES involving alliances or joint ventures with foreign partners are a popular way for companies to edge their way into the markets of foreign countries.
   CROSS-BORDER ALLIANCE enable a growth-minded company to widen its geographic coverage and strengthen its competitiveness in foreign markets: at the same time, they offer flexibility and allow the company to retain some degree of autonomy and operating control.
   
   
   
   
   strategic approaches in competing internationally:
   1) MULTIDOMESTIC STRATEGY: is one in which a firm varies its product offering and competitive approach from country to country in an effort to be responsive to differing buyer and preferences and market conditions.it is a think-local, act-local type of international strategy, facilitated by decision making decentralized to the local level.
   2) GLOBAL STRATEGY: is one in which a company employs the same basic competitive approach in all countries where its operates, sells much the same products everywhere, strives to build global brands and coordinates its actions worldwide with strong headquarters control. it represents a think-global, act-global approach.
   3) INTERNATIONAL STRATEGY: is a strategy for competing in two or more countries simultaneously.
   4) TRANSNATIONAL STRATEGY: is a think-global, act-local approach that incorporates elements of both multidomestic and global strategies.
   PROFIT SANCTUARIES are country markets that provide a firm with substantial profits because of a strong or protected market position. CROSS-MARKET SUBSIDIZATION supporting competitive offensives in one market with resources and profit diverted from operations in another market- can be a powerful competitive weapon.